AS vs IND AS (Old vs New Indian Accounting Standards)
-
date post
14-Sep-2014 -
Category
Economy & Finance
-
view
1.754 -
download
1
description
Transcript of AS vs IND AS (Old vs New Indian Accounting Standards)
CA Sandesh Mundrawww.consolidationofaccounts.com
Indian Accounting Std (old) vs IND AS (New)
CA Sandesh Mundrawww.consolidationofaccounts.com
• We have developed a software to automate the process of preparation of consolidated financial statements.
• To check out the same visit http://www.slideshare.net/sandeshmundra/console-13130822
Console ™Lets Automate Consolidation……..
CA Sandesh Mundrawww.consolidationofaccounts.com
Consolidation ProcessCurrency
Adjustment
JV Proportion
Goodwill
Intra Group Transactions
Accounting Policies
Adjustment
Equity Impact
Minority
Fixed Assets Schedule
Upload Trial
Balances
LBLA
Profit and Loss Account
Balance SheetConsolidation
Setup Master
One time activity
CA Sandesh Mundrawww.consolidationofaccounts.com
Overview of Significant Differences between IND AS and
Current Indian GAAP
CA Sandesh Mundrawww.consolidationofaccounts.com
TOPICS COVERED
Differences with respect to:
• Conceptual Accounting Framework• Accounting Differences• Carve Outs
CA Sandesh Mundrawww.consolidationofaccounts.com
ACCOUNTING FRAMEWORK
Historical cost
IFRS: Historical cost, but intangible assets, property plant and equipment (PPE) and
investment property may be revalued. Derivatives, biological assets and most securities must be revalued.
Indian GAAP:Historical cost, but fixed assets, other than intangibles, may be revalued.
CA Sandesh Mundrawww.consolidationofaccounts.com
ACCOUNTING FRAMEWORK
First-time adoption of accounting frameworks
IFRS: Full retrospective application with some optional exemptions.
Indian GAAP: particular standards specify the transitional treatment upon the first-time
application of those standards
CA Sandesh Mundrawww.consolidationofaccounts.com
LIST OF IND AS, IFRS AND AS
Ind AS IFRS AS
Ind AS 1 Presentation of Financial Statements
IAS 1 Presentation of Financial Statements
AS 1 Disclosures of Accounting Principles and Policies
Ind AS 2 Inventories
IAS 2 Inventories AS 2 Valuation of Inventories
Ind AS 7 Statement of Cash Flows
IAS 7 Statement of Cash Flows
AS 3 Cash Flow Statements
Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
AS 4 Contingencies and Events occurring after Balance Sheet Date
Ind AS 10 Events after the Reporting PeriodInd AS 10 Appendix A
IAS 10 Events after the Reporting PeriodIFRIC 17 Distribution of Non-cash Assets to owners
AS 5 Net Profit or Loss for the period, Prior Items and Changes in Accounting Policies
Ind AS 11 Construction ContractsInd AS 11 Appendix A (deferred)Ind AS 11 Appendix B (deferred)
IAS 11 Construction ContractsIFRIC 12 Service Concession ArngmtSIC 29 Disclosure – Service Concession Arrangements
AS 7 Construction Contracts
Ind AS 12 Income TaxesInd AS 12 Appendix A
Ind AS 12 Appendix B
IAS 12 Income TaxesSIC 21 Income Taxes – Recovery of Revalued Non-Depreciable AssetsSIC 25 Income Taxes – Changes in the Tax Status of an Enterprise or its Shareholders
AS 22 Accounting for Taxes on Income
Ind AS 16 Property, Plant and Equipment
IAS 16 Property, Plant and Equipment
AS 10 Accounting for Fixed AssetsAS 6 Depreciation Accounting
Ind AS 16 Appendix A
IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities
Ind AS 17 LeasesInd AS 17 Appendix A
Ind AS 17 Appendix B
Ind AS 17 Appendix C (Deferred)
IAS 17 LeasesSIC 15 Operating Leases – IncentivesSIC 27 Evaluating the Substance of Transaction involving the Legal Form of a LeaseIFRIC 4 Determining Whether an Arrangement contains a Lease
AS 19 Leases
Ind AS 18 RevenueInd AS 18 Appendix A
Ind AS 18 Appendix B
Ind AS 18 Appendix C
IAS 18 RevenueSIC 31 Revenue – Barter Transactions Involving AdvertisingIFRIC 13 Customer Loyalty ProgrammesIFRIC 18 Transfer of Assets from Customers
AS 9 Revenue Recognition
Ind AS 19 Employee BenefitsInd AS 19 Appendix A
Ind AS 19 Employee BenefitsInd AS 19 Appendix A
AS 15 Employee Benefits
Ind AS 20 Accounting For Government Grants and Disclosure of Government AssistanceAppendix A Government Assistance – No Specific Relation in Operating Activities
Ind AS 20 Accounting For Government Grants and Disclosure of Government AssistanceAppendix A Government Assistance – No Specific Relation in Operating Activities
AS 12 Accounting for Government Grants
Ind AS 21 The Effects of Changes in Foreign Exchange Rates
Ind AS 21 The Effects of Changes in Foreign Exchange Rates
AS 11 The Effects of Changes in Foreign Exchange Rates
Ind AS 23 Borrowing Costs
Ind AS 23 Borrowing Costs
AS 16 Borrowing Costs
Ind AS 24 Related Party Disclosure
IAS 24 Related Party Disclosure
AS 18 Related Party Disclosures
No Near Final Draft
IAS 26 Accounting and Reporting by Reporting by Retirement Benefits Plans
No standard
Ind AS 27 / IFRS 10 Consolidated and Separated Financial Statements Ind AS 27 Appendix A
IAS 27 Consolidated Separated and Financial Statements
SIC 12 Consolidation – Special Purpose Entities
AS 21 Consolidated Financial Statements
Ind AS 28 Investment in Associates
IAS 28 Investment in Associates
AS 23 Accounting for Investments in Associates in Consolidated Financial Statements
Ind AS 29 Financial Reporting in Hyperinflationary EconomiesInd AS 29 Appendix A
IAS 29 Financial Reporting in Hyperinflationary Economies
IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies
No standard
Ind AS 31 Interest in Joint Ventures / IFRS 11Ind AS 31 Appendix A
IAS 31 Interest in Joint Ventures
SIC 13 Jointly Controlled Entities – Non-Monetary Contributions by Venturers
AS 27 Financial Reporting of Interests in Joint Ventures
Ind AS 32 Financial Instruments: PresentationInd AS 32 Appendix B
IAS 32 Financial Instruments: Presentation
AS 31 Financial Instruments : Presentation
Ind AS 33 Earning Per Share
IAS 33 Earning Per Share AS 20 Earnings per Share
Ind AS 34 Interim Financial ReportingInd AS 34 Appendix A
IAS 34 Interim Financial Reporting
IFRIC 10 Interim Financial Reporting and Impairment.
AS 25 Interim Financial Reporting
Ind AS 36 Impairment Of Assets
IAS 36 Impairment Of Assets
AS 28 Impairment of Assets
Ind AS 38 Intangible AssetsInd As 38 Appendix A
IAS 38 Intangible Assets
SIC 32 Intangible Assets – Website Costs
AS 26 Intangible Assets
Ind AS 37 Provisions, Contingent Liabilities and Contingent AssetsInd AS 37 Appendix A
Ind AS 37 Appendix B
IAS 37 Provisions, Contingent Liabilities and Contingent Assets
IFRIC 5 Rights to Interest Arising from Decommissioning, Restoration and Environmental Rehabilitation FundsIFRIC 6 Liabilities Arising from Participating in a Specific Market – Waste Electrical and Electronic Equipment
AS 29 Provisions, Contingent Liabilities and Contingent Assets
Ind AS 39 Financial Instruments : Recognition and MeasurementInd AsS39 Appendix C
Ind AS 39 Appendix D
Ind AS 39 Appendix E
IAS 39 Financial Instruments : Recognition and Measurement
IFRIC 9 Reassessment of Embedded DerivativesIFRIC 16 Hedges of a net Investment in Foreign OperationIFRIC 19 Extinguishing Financial liabilities with Equity instruments
AS 30 Financial Instruments : Recognition and Measurement
Ind AS 40 Investment Property
IAS 40 Investment Property
No standard
No near Final Draft IAS 41 Agriculture No standard
Ind AS 101 First Time Adoption of Indian Accounting Standards
IFRS 1 First Time Adoption of International Financial Reporting Standards
No standard
Ind AS 102 Share Based Payment
IFRS 2 Share Based Payment
No standard
Ind AS 103 Business Combination
IFRS 3 Business Combination
No standard
Ind AS 39 Insurance Contracts
IFRS 4 Insurance Contracts
No standard
Ind AS 105 Non-Current Assets Held for Sale and Discontinuing operations
IFRS 5 Non-Current Assets Held for Sale and Discontinuing operations
No standard
Ind AS 106 Exploration for and Evaluation of Mineral Resources
IFRS 6 Exploration for and Evaluation of Mineral Resources
No standard
Ind AS 107 Financial Instruments : Disclosures
IFRS 7 Financial Instruments : Disclosures
No standard
Ind AS 108 Operating Segments
IFRS 8 Operating Segments
No standard
Not covered in Ind AS It was earlier covered in Exposure Draft
IFRIC 2 Members’ Share in Co-operative Entities and Similar Instruments
No standard
Not covered in Ind ASNot Relevant in India
SIC 7 Introduction of Euro
No standard
CA Sandesh Mundrawww.consolidationofaccounts.com
Major Carve Outs
• Revenue Recognition (IND AS 18)– IFRIC 15 – Agreement for construction of real estate has
not been adopted
CA Sandesh Mundrawww.consolidationofaccounts.com
Major Carve Outs
• Effects of changes in Foreign Exchange Rates (IND AS 21)– Option to recognise exchange differences on translation of
long term monetary items in equity
CA Sandesh Mundrawww.consolidationofaccounts.com
Major Carve Outs
• Related Party Disclosures (IND AS 24)– Overriding nature of statue– Definition of relative as per Co.s Act
CA Sandesh Mundrawww.consolidationofaccounts.com
Major Carve Outs
• Business Combinations (IND AS 103) – Recognition of gain on day one accounting for a business
combination in capital reserve as opposed to income statement under IFRS 3
– Guidance on Common Control Transactions
CA Sandesh Mundrawww.consolidationofaccounts.com
Major Carve Outs
• Employee Benefits (IND AS 19)– Government bond rate as discount rate– Recognition of acturial gains and losses – Other long term
employee benefits – only in OCI and not P&L or P&L amort
– Frequency of Acturial Valuation
CA Sandesh Mundrawww.consolidationofaccounts.com
Major Carve Outs
• Financial Instruments – Rec and Msrmt (IND AS 39)– Change in fair value of a financial liability due to entitiy’s
own credit risk.
CA Sandesh Mundrawww.consolidationofaccounts.com
Major Carve Outs
• Investment in Associates (IND AS 28)– Different accounting periods and policies of associates
CA Sandesh Mundrawww.consolidationofaccounts.com
Major Carve Outs
• Investment Property (IND AS 40)– Only Cost Model
CA Sandesh Mundrawww.consolidationofaccounts.com
Major Carve Outs
• EPS (IND AS 33)– Both Standalone and CFS
CA Sandesh Mundrawww.consolidationofaccounts.com
Major Carve Outs
• Govt Grants (IND AS 20)– Non-monetary government grants only at fair value and not at nominal
value
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 2 VS AS 2Inventories
CA Sandesh Mundrawww.consolidationofaccounts.com
IND-AS 2 - Inventories
Fair value of purchases
CA Sandesh Mundrawww.consolidationofaccounts.com
Timing of recognition of purchases
IND-AS 2 - Inventories
CA Sandesh Mundrawww.consolidationofaccounts.com
Cost of inventories of a service provider
IND-AS 2 - Inventories
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 8 VS AS 5Changes in Accounting Policies, Estimates, Prior Period Itesm
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 8 - Acc pol., changes in acc est., errors
Changes in accounting policies
CA Sandesh Mundrawww.consolidationofaccounts.com
Changes in method of depreciation
IND AS 8 - Acc pol., changes in acc est., errors
CA Sandesh Mundrawww.consolidationofaccounts.com
Prior period items - errors or omissions arising from a failure to use or
misuse of reliable information- Retro
IND AS 8 - Acc pol., changes in acc est., errors
CA Sandesh Mundrawww.consolidationofaccounts.com
extraordinary items
IND AS 8 - Acc pol., changes in acc est., errors
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 10 VS AS 4Events after Balance Sheet Date
CA Sandesh Mundrawww.consolidationofaccounts.com
• Proposed dividend
IND AS 10 - Events after reporting date
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 11 VS AS 7Construction Contracts
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 11 - Construction Contracts
Service Concession Arrangements (Ex)
CA Sandesh Mundrawww.consolidationofaccounts.com
Ex – Service Concession Agrmt.
• A incurs cost of INR 1,000,000 for construction of a road.
• In consideration, A receives a right to charge toll of INR 30 on each vehicle plying on that road for 30 years
CA Sandesh Mundrawww.consolidationofaccounts.com
Construction Contracts
Agreements for construction of real estate
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 18 VS AS 9Revenue Recognition
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 18 – Revenue Recognition
Multiple element arrangements (Ex)
CA Sandesh Mundrawww.consolidationofaccounts.com
Example• A sells a machine with a two year
maintenance service for INR 1,000,000 to a customer.
• A two year maintenance service is provided to other customers at a consideration of INR 200,000.
IND AS 18 – Revenue Recognition
CA Sandesh Mundrawww.consolidationofaccounts.com
Linked transactions
Examples – Loan origination fees charged by banks
IND AS 18 – Revenue Recognition
CA Sandesh Mundrawww.consolidationofaccounts.com
Customer loyalty programmes
IND AS 18 – Revenue Recognition
CA Sandesh Mundrawww.consolidationofaccounts.com
Extended credit
IND AS 18 – Revenue Recognition
CA Sandesh Mundrawww.consolidationofaccounts.com
Barter transactions
• Recognition of transactions that were previously not recognised (for example, certain advertising barter transactions);
• Non-recognition of transactions that are currently being recognised (for example, certain oil barter transactions).
IND AS 18 – Revenue Recognition
CA Sandesh Mundrawww.consolidationofaccounts.com
• Percentage Completion
IND AS 18 – Revenue Recognition
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 27/28/31/103 VS AS 14/21/23/27
Business Combination and Consolidations
CA Sandesh Mundrawww.consolidationofaccounts.com
Business Combination / Consolidation
Definition of Control– Substance over form– Temporary– SPE
CA Sandesh Mundrawww.consolidationofaccounts.com
Business Combination / Consolidation
Contingent Consideration / Acq Date
CA Sandesh Mundrawww.consolidationofaccounts.com
Business Combination / Consolidation
• Goodwill – Fair Value of assets & liabilities acquired– Amortisation
CA Sandesh Mundrawww.consolidationofaccounts.com
Business Combination / Consolidation
• Minority– Fair Value– Negative
CA Sandesh Mundrawww.consolidationofaccounts.com
Business Combination / Consolidation
Uniform Accounting Policy & Time Gaap
CA Sandesh Mundrawww.consolidationofaccounts.com
Business Combination / Consolidation
Proportionate Consolidation
CA Sandesh Mundrawww.consolidationofaccounts.com
Business Combination / Consolidation
Step up and Step down
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 16 VS AS 10Property, Plant & Equipment
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 16 –Property, Plant & Eqpmt
• Overhead allocation
• Component approach
CA Sandesh Mundrawww.consolidationofaccounts.com
Site Restoration
IND AS 16 –Property, Plant & Eqpmt
CA Sandesh Mundrawww.consolidationofaccounts.com
• Revaluation of assets• Depreciation on the same
IND AS 16 –Property, Plant & Eqpmt
CA Sandesh Mundrawww.consolidationofaccounts.com
• Cash Price Equivalent
IND AS 16 –Property, Plant & Eqpmt
CA Sandesh Mundrawww.consolidationofaccounts.com
• Residual Value and Useful life
IND AS 16 –Property, Plant & Eqpmt
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 23 VS AS 16Borrowing Costs
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 23 - Borrowing Costs (BC)
No period as 12 months
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 23 - Borrowing Costs (BC)
Consolidation :-– Special case of capitalisation of BC – Group Average borrowing rate
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 7 VS AS 3Cash Flow Statement
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 7 - Cash Flow
• Undistributed profits of associates and non-controlling interests’ under operating activities.
CA Sandesh Mundrawww.consolidationofaccounts.com
• Ind AS 7 requires to report the aggregate amount of the cash paid or received as consideration for obtaining or losing control
IND AS 7 - Cash Flow
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 12 VS AS 22Deferred Tax
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 12
Balance sheet approach (Ex)
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 12
Examples– on revaluation of PPE; – indexation benefits for freehold land and
investments; – fair value changes for available for sale securities;
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 12
Deferred Taxes arising in consolidation
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 12
Reconciliation of current tax as per actual basis and as per applicable statutory rate
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 17 VS AS 19Leases
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 17 - Lease
Embedded leases (Ex)
CA Sandesh Mundrawww.consolidationofaccounts.com
Ex of an Embedded Lease
• A enters in a purchase contract with B to purchase 1,000 units of product every month at INR 25 per unit.
• Product can only be manufactured on a specific machine owned by B.
• In case of any shortfall in procurement, A will compensate B at the rate of INR 25 per unit of shortfall.
• The entire output from machine is availed by A.
CA Sandesh Mundrawww.consolidationofaccounts.com
Leases of land
IND AS 17 - Lease
CA Sandesh Mundrawww.consolidationofaccounts.com
• Lease incentives– Initial rent free period ?
IND AS 17 - Lease
CA Sandesh Mundrawww.consolidationofaccounts.com
• Lease deposits
IND AS 17 - Lease
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 19 VS AS 15Employee Benefits
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 19 - Employee Benefits
• Actuarial gains and losses in OCI– defined benefit plans and other long term
employment benefit plans.
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 21 VS AS 11Foreign Exchange
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 21 – Foreign Exchange
• Functional Currency vs Domicile Currency
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 21 – Foreign Exchange
• Permits FE diff on long term monetary items to be posted to equity. The accumulated diff can be transferred to P/L over the term of such item
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 21 – Foreign Exchange
• Existing AS 11 permits capitalisation / deferral of Fe Gain/Loss arising from long term monetary items
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 20 VS AS 12Government Grants
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 20 – Govt Grants
• No credit to Reserves• No credit to PPE• Concessional Loans• Non-Monetary Grants
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 24 VS AS 18Related Party
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 18 – Related Party
• Defines close members of family• KMP of parents• Non-executive directors• Group companies
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 33 VS AS 20Earning Per Share
CA Sandesh Mundrawww.consolidationofaccounts.com
IND AS 33 – EPS
• Amounts debited to Share Premium• Compulsory convertible instruments• Shares held by Trust
CA Sandesh Mundrawww.consolidationofaccounts.com
Share Based Payments
• Fair Value Model• Grants to employees of Parent• Shares Held in Trust
CA Sandesh Mundrawww.consolidationofaccounts.com
• Intangibles – Life – Finite or Indefinite• Investment Property – Classification• Financial Instruments• Segments• Provisions• Impairments
CA Sandesh Mundrawww.consolidationofaccounts.com
Contact Details
Aarna Soft Solutions Private Limited
Email: [email protected]: +91 94260 24975
Web: www.aarnasoft.net
Thank You !